THE SWEDISH UNEMPLOYMENT EXPERIENCE

Since the 1960s, Sweden has sustained a remarkably low unemployment ra te while the average duration of unemployment spells has been increasi ng over time. This pattern is reproduced in an equilibrium search mode l incorporating progressive income taxes, generous unemployment compen sation, and a program for preventing unemployed workers from abusing t he system. Our analysis raises concerns about how well the Swedish sys tem is equipped to handle the current situation of high unemployment.